Two connected corporate rescue firms which encouraged directors struggling with company debts to sell their businesses and avoid liquidation have been shut down following investigations by the Insolvency Service.
Atherton Corporate (UK) Ltd and Atherton Corporate Rescue Limited, both of which traded under the Atherton brand, claimed their services were ‘a legal alternative to using insolvency practitioners’.
They helped sell companies in financial distress, misleading former directors by telling them they could keep their company’s assets, continue to trade the business through a new company and avoid any responsibility for its debts.
Five associated companies which supported the scheme by buying the distressed companies and appointing new directors have also been shut down.
“The Atherton companies told customers that resigning as directors before formal insolvency proceedings would remove the risk of reputational damage,” said Mark George, chief investigator at the Insolvency Service.
“However, neither company identified genuine purchasers for the businesses in financial distress but instead operated a scheme to help former directors and owners disassociate themselves from their company debts while retaining any assets.
“These actions would appear to have deliberately undermined the insolvency regime which is why the Secretary of State applied to have them and their associated companies wound-up in the public interest.”
Atherton Corporate (UK) Ltd and Atherton Corporate Rescue Limited advertised their services on two dedicated websites, www.athertoncorporate.co.uk and www.nationalcompanyrescue.co.uk. Both are still live at the time of writing.
The fees Atherton charged clients depended on the level of their company’s liabilities. In cases where the liabilities were more than £500,000, they would charge £15,000 plus VAT.
The companies, which were led by former director John Irvin, made several misrepresentations to prospective clients, says the Insolvency Service, suggesting they could retain their company assets while transferring liabilities to the buyers without the risk of consequences.
It says they told customers there would be no requirement for former owners to cooperate with liquidators, insolvency practitioners or the Insolvency Service and that recovery action would not be taken against them by the new directors for any debts due by them to the company in financial distress.
Other misleading advice cited by the Insolvency Service included claims that the new company could use the distressed company’s trading names without any need to pay for them, and that the books and records of the distressed company could be disposed of after the sale.
They are also said to have advised would-be customers that they could delay providing information to Companies House so they could continue to access the distressed company’s bank account.
The Atherton companies were supported by five associates who supported their business model by purchasing the companies in financial distress and providing them with new directors: Aguia Group Ltd (director Neville Taylor); GPA KLM Ltd (director Karen Mortimer); Namare GRP Ltd (directors Taylor and Suzanne Harley-Davies); Summers & May Ltd (directors Mortimer and Joanna Seawright); and TPG GRP Limited (directors Taylor and Harley-Davies).
The companies in financial distress ceased trading shortly before or at the point of sale. The purchasing company and new directors existed to keep the company active for as long as possible to create a gap between the former owners and directors and any future liquidation.
Shares in both Atherton companies were transferred in July this year to a company whose sole director is Mortimer, director of GPA KLM.
Their names were also changed to POC Ventures Ltd and QRG Consulting Ltd shortly before court hearings placed the two companies into provisional liquidation.
Irvin resigned from the Atherton companies shortly before the provisional liquidation hearings, as did Harley-Davies from Namare and TPG GRP and Seawright from Summers & May.
The Official Receiver has been appointed as liquidator of Atherton Corporate (UK) Ltd, GPA KLM Ltd, Namare GRP Ltd, Summers & May Ltd, and TPG GRP Limited following the winding-up of the companies at the High Court in London.
Julie Tait of Grant Thornton UK LLP has been appointed as liquidator of Atherton Corporate Rescue Limited and Aguia Group Ltd after the companies were wound-up at the Court of Sessions in Scotland.
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